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Teaching kids money and investing fundamentals

In the Wall Street Journal, I came across an article about Judith Ward, a financial adviser, who shared her experience teaching her children to save and invest money.

The steps in this article were very familiar to me. My mom did much of the same for me that Judith did with her kids. My mom isn’t a financial adviser, and you don’t need to be, either. Just remember: KISS, Keep It Simple, Sweetie. Don’t overwhelm your kids with the details, or scarcity stories.

Judith opened savings accounts for her kids when they were in elementary school. She’d take her kids to the bank to make their deposits and review their monthly statements with her.

As a child, I’d often gone to the bank with my mom and seen her deposit money into her account. She’d give short lessons, without me knowing announcing, “This is a lesson.” She’d say things like, “I put money in so we can buy food/clothing/Girl Scout uniform when we need it.” When I was thirteen, my mom took me to the bank and I opened my own savings account. I’d save money from the jobs I had—ironing and babysitting, and we’d make trips to the bank together to deposit our money. When I got a bank statement, mom showed me how to read it. I loved the reward of seeing the amounts go up!

As Judith’s children grew older, she’d show them her paychecks, and her monthly bank statements with them as a learning tool. She’d also share her investment statements with them.

My mom didn’t show me that information, but she did tell me things like, “Every little bit of savings makes a difference for now, and the future.”

Judith shared how she explained to her son, now 23, how to invest when he opened up a retirement account. If he invested every month—whatever the market was doing, he’d get fewer shared if the market was up, and but more shares if it was down. That’s known as dollar-cost averaging, but she, didn’t use fancy financial adviser terms on her son. She used what he could understand, and because it made sense, he’ll probably stick to saving money.

How do you talk to your kids about money? Are you trying to teach someone how to budget, or invest? Or, are you in process of learning yourself? KISS. KISS. KISS. Keep It Simple, Sweetie.